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OECD Sovereign Borrowing Outlook 2014
OECD Publishing , Publication date:  07 May 2014
Pages: 132 , Language: English
Version: Print (Paperback) + PDF
ISBN: 9789264204164 , OECD Code: 202014011P1
Price:   €40 | $56 | £36 | ¥5200 | MXN720 , Standard shipping included!
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Other Versions:  E-book - PDF Format

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Frequency: Annual   Tables: 22  Charts: 51 


Each year, the OECD circulates a survey on the borrowing needs of member countries. The responses are incorporated in the OECD Sovereign Borrowing Outlook to provide regular updates of trends and developments associated with sovereign borrowing requirements and debt levels from the perspective of public debt managers. The Outlook makes a policy distinction between funding strategy and borrowing requirements. The central government marketable gross borrowing needs, or requirements, are calculated on the basis of budget deficits and redemptions. The funding strategy entails decisions on how borrowing needs are going to be financed using different instruments (e.g. long-term, short-term, nominal, indexed, etc.) and distribution channels.

Accordingly, the OECD Sovereign Borrowing Outlook provides data and information on borrowing needs and funding policies for the OECD area and country groupings, including gross borrowing requirements, net borrowing requirements, central government marketable debt, funding strategies and instruments and distribution channels.

Table of contents:

Acronyms and abbreviations 11
Editorial 13
Executive summary 15
Chapter 1. Sovereign borrowing overview 17
-1.1. The combined gross borrowing needs of OECD governments seem to have peaked but government debt ratios continue to rise 18
-1.2. Higher levels of confidence but mixed signals on volatility 20
-1.3. Outlook for central government marketable gross borrowing needs for OECD groupings 21
-1.4. Outlook for central government marketable gross borrowing needs of individual OECD countries 22
-1.5. The behaviour of long-term government borrowing rates in OECD government securities markets 24
-1.6. Why are long-term borrowing rates strongly correlated? 24
-1.7. Direction of the transmission of monetary policy shocks across countries 26
-1.8. The interest rate effects of government debt and its maturity 27
-1.9. The challenge of raising large volumes of funds with acceptable rollover risk 27
-1.10. Funding strategy 30
-1.11. Government debt at a glance: General government debt as a percentage of GDP is projected to surpass the World War II peak 31
-1.12. Gross central debt versus gross and net financial general government debt 33
-References 37
Chapter 2. Outlook for sovereign stress 39
-2.1. Overall sovereign market stress in the OECD area seems to have subsided somewhat… 40
-2.2. But the issuance climate remains influenced by important policy challenges 40
-2.3. The evolution of fiscal balances and sovereign debt and the threat of fiscal dominance 41
-2.4. Fiscal consolidation and public debt management policy 42
-2.5. Overcoming extreme sovereign stress: The return to (international) longer-term markets 47
-2.6. Changes in the aggregate demand for and supply of safe sovereign assets 52
-2.7. Is there a structural shortage in the supply of safe sovereign assets? 53
-2.8. Reasons why the triple-A standard for assessing the alleged shortage in the supply of safe sovereign assets is not very reliable 54
-2.9. Importance of the supply of T-bills 56
-2.10. Local imbalances in the supply and demand for safe sovereign assets 56
-References 58
Chapter 3. Challenges for public debt management: The use of, and exit from, central bank asset purchase programmes  59
-3.1. Background and Introduction 60
-3.2. Policy response to the worst global financial crisis on record 61
-3.3. UMP operations and the demand for government securities 62
-3.4. Conflicts between UMP, sovereign issuance and market functioning? 64
-3.5. Sovereign borrowing and future exit policies create a new set of challenges 67
-3.6. DMOs have a great interest in a smooth exit  67
-3.7. The challenge of higher US rates and impact on borrowing conditions elsewhere  68
-3.8. Lessons from the May-June turmoil 70
-3.9. Sound sovereign debt management needs to be part of a credible overall exit strategy 71
-3.10. Return to a more transparent and predictable issuance framework aimed at lower rollover risk 71
-References 74
Chapter 4. Challenges in primary and secondary markets 75
-4.1. The need to adjust issuance procedures and techniques in different groups of countries 76
-4.2. Results from an OECD survey on the current use of issuance procedures and policies 76
-4.3. Overview of changes in issuance procedures and techniques in OECD primary markets 81
-4.4. Floating Rate Notes (FRNs) 84
-4.5. Syndication 85
-4.6. Impact of forthcoming regulations on the functioning of primary markets 87
-4.7. Impact of (new) regulations on liquidity in secondary markets 91
-References 93
Chapter 5. The pros and cons of direct bidding 95
-5.1. Background and executive summary 96
-5.2. Direct bidding and auction mechanics 96
-5.3. Benefit of direct bidding 98
-5.4. Disadvantages of direct bidding 98
-5.5. Risks of direct bidders 99
-5.6. Impact of direct bidding 99
-5.7. Possible further topics for discussion 100
-Appendix 5.A1. Survey results 101
Annex A. Assessing the cost effectiveness of index-linked bond issuance: A methodological approach, illustrated using UK examples 107
Annex B. Methods and sources 119
Glossary 130

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